Sirius XM Kicks It In

Shares of Sirius XM Radio (Nasdaq: SIRI  ) hit a fresh two-year high yesterday.

One has to go all the way back to the summer of 2008 -- just as Sirius and XM were consummating their oft-delayed merger -- to find the last time the stock was trading this high.

Bulls will argue that the satellite radio provider has earned every uptick. The combination of the two capital-intensive enterprises opened the door to the no-brainer synergies resulting in today's profitable media giant. Rebounds in both the economy and new car sales have delivered six consecutive quarters of sequential subscriber growth.

Bears, on the other hand, are probably scratching their heads. Why did Sirius XM shares hit a new intraday high yesterday? After two years of heady gains, the start of the new trading year would have been a logical time for tax-geared profit taking. The only real news on the day was a deal to begin broadcasting Manchester United games, but is international soccer really much of a radio draw closer to home? Did anyone catch last year's World Cup action on radio?

Once again, bears would be missing the point.

For starters, the soccer deal isn't all that insignificant given the global popularity of Manchester's club. In a telling move, the deal also includes mobile streaming -- something that may a bigger driver in 2011 now that even Howard Stern is on board.

Mobile streaming for Apple's (Nasdaq: AAPL  ) iPhone and iPod touch, Research In Motion's (Nasdaq: RIMM  ) BlackBerry, and Google's (Nasdaq: GOOG  ) Android devices may be a hard sell as a stand-alone service at $13 a month, but it's a justifiable $2.99-a-month add-on for existing subscribers with receivers. It's a small price to pay for the ability to make Sirius or XM truly portable for the growing installed base of smartphone owners without having to buy a handheld unit.

Last week I predicted that Sirius XM will deliver its third consecutive year of stock gains, so I don't think this will be the last time the satellite radio star hits a fresh multiyear high. After all, how many more Manchester United-type deals will we get in the year ahead? A single deal may not move the needle, but securing premium niche-specific content adds up over time in sticky subscribers.

Sirius XM remains at the mercy of both the economy and the auto industry, but it's a fair wager that those two fronts will be stronger by the end of the year.

Sirius XM has its goals, and they go beyond what a Manchester striker just smacked past the goalie.

What content deal would you like to see Sirius XM ink next? Share your thoughts in the comment box below.

Google is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor pick. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the stocks in this article. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (16)

Comments from our Foolish Readers

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  • Report this Comment On January 04, 2011, at 11:33 AM, waterinfo wrote:

    Driving home from my tennis match this morning, in the car that does not yet have an XM radio and being forced to listen to local "free" radio programming, it occurred to me that there is another reason why SiriusXM will do very well over the next few years.

    As the number of subscribers grows, more and more national advertisers will begin to move their advertising from hundreds of local AM and FM stations, to the commercial channels on Sirius and XM. Vacant ad slots on the local stations will become increasingly filled with loud, obnoxious commercials from the local rug merchants and used car lots. The difference in quality between SiriusXM programming and local programming will become increasingly large, improving the retention rate of trial subscribers, and driving former subscribers to renew their subscriptions.

  • Report this Comment On January 04, 2011, at 11:58 AM, pawi2009 wrote:

    Manchester soccer is the first contract to give us a glimpse of OUR content going "Global" ! Anyone NOT getting this??? Our CONTENT will be distributed all over the world via phone apps and internet streaming. More contracts to come! IMO

    Hang with us Rick, we gonna make some $$ !!

  • Report this Comment On January 04, 2011, at 12:05 PM, mattskin wrote:

    It's amazign the Fool has this article when just a couple weeks ago they had another saying to avoid SIRI in 2011 because their technology is no longer cutting-edge.

    Last I checked, people bought SIRI for the content...

  • Report this Comment On January 04, 2011, at 2:52 PM, motleymarty wrote:

    waterinfo--Spot on! You nail it every post.

    pawi2009--Bingo, except I don't know what "IMO" means!

    mattskin--Content is king! And it's not strange to have two conflicting points of view -- it's American.

    Thanks, Rick, for your informative articles.

  • Report this Comment On January 04, 2011, at 5:35 PM, Blueman1000 wrote:

    I'm a small fish, private self educated investor, every dime is precious to me. SIRI Radio is precious to me. People need to understand that it's not just music and talk, it's sports, the NFL in 2011, it's the NBA, it's Soccer, it's the internet with streaming, it's the Apps, it'sw Global. Siri has got to do a better job of explaining themselves though. Apple Inc, is now running more commercials on TV for example. I'm just throwing this out but I'd like to see each New H

  • Report this Comment On January 04, 2011, at 5:37 PM, Blueman1000 wrote:

    Sorry I hit the enter button, as I was saying above, I'd like to see EACH NEW HOME COME WITH A SIRI SYSTEM.?

  • Report this Comment On January 04, 2011, at 6:35 PM, rgardner101 wrote:

    I would like to see SIRI radio systems available on many different appliances just like Netflix is available

    just about everywhere you turn.

  • Report this Comment On January 04, 2011, at 7:04 PM, mysqsuser wrote:

    motleymarty - "IMO" == In My Opinion

    some folks us "IMHO" In My Humble Opinion

    I think SIRIusXM is without equal

    They probably know what they have - many others don't yet

    In a couple years (IMHO)....

    our kids should be watching TV over SIRI in cars

    perhaps a SAT receiver can be built right into a mobile device (?)

    and the content argument is huge - so much content can be readily available

    (?) I wonder if they could even provide internet connectivity - this may be a stretch - but who knows

    Remember they have the network & the content deals

  • Report this Comment On January 04, 2011, at 7:06 PM, imsirius wrote:

    i would like to see sirius satellite internet service,a bundle package with their radio service would be just what i need on my travels.

  • Report this Comment On January 04, 2011, at 9:25 PM, shakespfool wrote:

    Motley fool, flips flops like Jim Cramer.

  • Report this Comment On January 05, 2011, at 7:39 AM, mbl1234 wrote:

    "As the number of subscribers grows, more and more national advertisers will begin to move their advertising from hundreds of local AM and FM stations, to the commercial channels on Sirius and XM"

    Oh good, pay a subscriber fee to listen to more and more commercials? Another reason not to sign up.

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